License Compliance

What is License Compliance?

License compliance is the process of ensuring that an organization adheres to the legal terms and conditions specified in software licenses. This includes both proprietary software licenses and open source licenses, each with their own set of requirements, restrictions, and obligations. Proper license compliance protects organizations from legal risks, including copyright infringement claims, breach of contract lawsuits, and potential injunctions against product distribution.

As modern software often incorporates hundreds or thousands of third-party components, maintaining license compliance has become increasingly complex and critical to software supply chain management.

Types of Software Licenses

Open Source Licenses

Permissive Licenses

• MIT License - Minimal restrictions, allows use in proprietary software
• Apache License 2.0 - Includes patent grants, allows proprietary use
• BSD Licenses - Family of permissive licenses with varying requirements

Copyleft Licenses

• GNU General Public License (GPL) - Requires derivative works to be distributed under the same license
• GNU Lesser General Public License (LGPL) - Modified GPL that allows linking from non-GPL software
• Mozilla Public License (MPL) - Weak copyleft, file-level licensing

Community Licenses

• Eclipse Public License (EPL) - Weak copyleft with patent provisions
• Common Development and Distribution License (CDDL) - Based on MPL

Proprietary Licenses

• End User License Agreement (EULA) - Standard commercial software licenses
• SaaS/Cloud Service Agreements - Terms for cloud-based services
• Enterprise Licensing - Custom agreements for organizations

License Compliance Challenges

License Incompatibility

Different open source licenses may have conflicting terms that make it legally impossible to combine components in a single product.

Transitive Dependencies

Software packages often depend on other packages, creating a complex web of licenses that must be tracked and managed.

License Identification

Accurately identifying the licenses of all components can be challenging, especially when license information is missing or ambiguous.

Fulfilling License Obligations

Each license may impose specific obligations, such as:

• Attribution requirements
• Source code disclosure
• License text inclusion
• Modification notices
• Patent grants or retaliation clauses

License Compliance Best Practices

1. License Inventory - Maintain a comprehensive inventory of all software components and their licenses
2. License Policy - Establish clear policies on acceptable licenses for different use cases
3. Automated Scanning - Use Software Composition Analysis (SCA) tools to detect licenses automatically
4. Legal Review - Have legal counsel review high-risk or complex licensing situations
5. Developer Training - Educate developers on license implications when selecting dependencies
6. Continuous Monitoring - Regularly scan codebases as new dependencies are added
7. Attribution Documentation - Maintain accurate attribution notices for all components
8. SBOM Generation - Create and maintain Software Bills of Materials with license information
9. License Compatibility Analysis - Verify that combined licenses are legally compatible
10. Distribution Compliance - Ensure all license requirements are met when distributing software

Consequences of Non-Compliance

• Legal Action - Risk of lawsuits from copyright holders
• Remediation Costs - Expensive code rewrites to remove infringing components
• Injunctions - Court orders to stop distributing products
• Reputation Damage - Public relations impact of license violations
• Merger & Acquisition Issues - Licensing problems can derail M&A transactions
• Customer Trust Erosion - Customers may question overall security and compliance posture